CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Advantage Corp.'s capital structure was as follows:

During 2000, Advantage paid dividends of $3 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock. The 8 percent bonds are convertible into 30,000 shares of common stock. Net income for 2000 was $850,000. Assume the income tax rate is 30 percent. The basic earnings per share for 2000 is ______.
A. $6.54
B. $7.08
C. $7.45
Explanation: Basic EPS = Net income - Pref Div / Wt. Ave. Shares of Common 850,000 - (3 * 10,000) / 110,000 = $7.45

User Contributed Comments 2

User Comment
km16 careful, basic and not diluted EPS
serboc real test is notorious rearranging the years
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